The Missouri General Assembly today gave its final approval to a measure that will help spur job creation in Missouri. Senate Bill 19, sponsored by Sen. Eric Schmitt, R-Glendale, now moves to the governor’s desk for his signature to become law. The bill, if approved by the governor, would take effect August 28. The bill would first freeze and then phase out Missouri’s corporate franchise tax over a five year period.
“By phasing out this double taxation on employers we eliminate a disincentive that penalized companies for investing more in our state,” said Schmitt. “With the governor’s swift signature, companies would be able to invest in hiring new employees instead of growing government through higher taxes.”
The bill caps corporate franchise tax liabilities at the amount of each corporation's tax liability for the 2010 tax year. New businesses would be capped at the amount of their corporation's franchise tax liability for its first full year of existence. Then, beginning January 1, 2012, the tax would be phased out over a five year period.
Senate Leader Robert N. Mayer, R-Dexter, said putting Missourians back to work topped the Senate’s priority list for the 2011 Legislative Session.
“This bill is the first step to help put the more than 280,000 Missourians who have been out of work for the past year and a half back to work in good-paying jobs with benefits,” Mayer said. “By ending this double tax, we are making sure Missouri is competitive when it comes to bringing new investments and jobs to our state.”
Schmitt said Missouri is one of a few states that still charge businesses a tax just to expand or invest in our state. Kansas has been phasing out its franchise tax since 2007, and beginning in tax year 2011, it will be repealed altogether. The corporate franchise tax is based on a percentage of a company’s assets. Corporations already pay taxes on their earned income as well as Missouri sales and property taxes.
Schmitt noted the change would make Missouri more attractive to businesses currently looking to expand and, in particular, may lure businesses from Illinois that recently raised taxes on corporations.
“The corporate franchise tax is an outdated tax that is only still imposed in a handful of states,” said Schmitt. “While other states raise taxes on business in an attempt to close their budget gaps, we can set Missouri apart and make it clear that this is a place where businesses can expand and create jobs without being penalized.”
To learn more about the bill, visit www.senate.mo.gov.
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